Estate planning tips
Life insurance protects your dependents when you die. Living benefits, as the words would imply, are insurance contracts that protect those who are financially dependent and the insured as well.
Living benefits can be provided through group benefit packages by some employers. But for self-employed people or those working without a group benefit package or retired people, insurance can be available through individual contracts.
Retirees would benefit most from long-term care or individual health insurance. Applicants may have to complete medical questionnaires and be approved to qualify for coverage. Not all insurance companies offer coverage, so it is important to discuss these options with your financial advisor.
Examples of products used to protect an insured and their family are critical illness insurance, disability insurance, long term care insurance and individual health insurance.
Critical illness insurance is designed to provide a tax-free lump sum payment to the insured if they are diagnosed by a professional medical practitioner with a covered condition. The insured must be healthy when they buy it of course and sometimes a family history of poor health can affect an applicant’s chances of being approved, but if you can get approved the critical illness benefit could be a savior to protecting the financial wellbeing of the entire family.
Disability insurance can protect the monthly income of working people. There are many different levels, types and quality of coverage depending on the type of work, the stability of the work and the time the insured has been working in a particular field. However, it may be the most important living benefit product.
If you can’t work, where will the money come from.
The benefit is paid when the insured person cannot work and meets the specific definition of disability in the contract. Some of the better policies cover people for injury and sickness.
The most common policies mirror the coverage provided through group benefit packages and end at age 65.
Long term care insurance is for individuals who want to protect their financial stability and quality of life over and above what the government programs will provide. A monthly benefit is paid to claimants to cover nursing costs. It could be applied to home care costs that exceed government services.
The benefits are that you could remain in your home longer and you could prevent the depletion of your retirement savings.
Individual Health insurance can protect against a catastrophic increase in prescription drug costs or other major health expenses. Like long term disability, health insurance can mirror what is commonly offered through group benefit plans.
You can customize your coverage from basic to comprehensive as your needs and financial resources may require.
All these products can bring peace of mind and protect your retirement savings from an unexpected and rapid depletion.
Tom Hyde CFP BScAg CAFA Tom is a financial advisor operates Pallister Financial, a financial services company in Portage la Prairie, Manitoba
Note: The information in this article is not intended to be legal or tax advice. You should contact your legal and tax advisors for proper legal and tax advice.
